Detroit Automakers Feb Sales: Double Digit Drops

Average U.S. gasoline prices rose 5.9% last month to $3.17, while median existing home prices fell 4.6%.

The tough car sales environment for auto sales, evidenced by an industry-wide 10% year-over-year decline, is hitting Detroit's Big Three automakers hard.

General Motors Corp. light-vehicle sales fell 12.9%, Ford's dropped 6.6% and Chrysler was off 14% compared with Feb 2007.

Note that the 29-day leap year Feburary understates losses and amplifies gains relative to last years 28 day month.

Ford

Ford has few new products to stem the tide.

Ford's main success story is the Focus, featuring the voice activated communications-entertainment gismo "Sync."

Ford's cars fell 9.3 percent, as gains by smaller models Fusion and Focus were offset by weak demand for heavy old fashioned sedans Taurus and Crown Victoria.

Ford's truck sales were off 5.3%, with a 4.9% drop in F- Series pickups. Explorer SUV experienced a 27% sales debacle.

Ford plans to slash North American second-quarter output 10%. Chicago and in Louisville assembly plants will go to one shift from two later this year.

Chrysler

Chrysler, presently fourth in U.S. sales, fell 14%. Sales declines of 32% for Dodge Grand Caravan and 23% for Jeep Wrangler exceeded even my very pessimistic expectations.

General Motors

Cars, led by Chevy Malibu and Cadillac CTS, fell just 1.2 percent.

Honda Gains

It's been two years now since I first said Honda was the smart money in this overbuilt business.

Honda/Acura sales rose 4.9% over February 2007.

Sales of Honda's light trucks even rose, by 6.1%, paced by CR-V and Pilot SUVs, while passenger cars increased 3.9%.

Honda division sales were up 6.2%, with perennially-recommended-here Civic up a nice 18.8%. The too-conservatively remodeled Accord had a 9% drop.

Acura division sales fell 4.2%. Acura's TSX fell 17.1% and MDX was up 5%.

Nissan sales increased 1.2%.

Mercedes-Benz improved 7.3%, while Volkswagen was up 1.2%.

BMW fell 1.8 percent, and Porsche was off 11%.

Buyer's Market Intensifies

As car makers scramble to survive the industry's worst season in a decade, a wide rage of 2008 models are being offered with low interest financing, rebates, special lease deals and other incentives.

Demand has fallen faster than production can be cut, so inventories continue to grow. Subprime buyer loans have dried up.

In a recent survey of U.S.dealerships, 71% reported declining showroom traffic.

Average new vehicle incentives increased to $2,418 from $2,234 a year earlier.

Ford's F-150 pickup remains the best-selling vehicle on the U.S. market, supported by rebates of $5,000.

Chrysler's Dodge Ram pickup also offers $5,000 cash back.

Chevrolet Silverado has $3,250 in rebates.

The real tell-tale for the pickup market/SUV is Toyota Tundra and Sequoia, with rebates of up to $5,000.

Chrysler has promised a new incentive program for March. Dodge Ram trucks with Hemi engines are said to be available at no additional markup.

The auto industry's seasonally adjusted annual selling rate (SAAR) projects the annual sales total by adjusting for seasonal factors.

SAAR for February fell to 15.4 million vehicles from 16.6 million for 2007.

Tightening credit standards in 2008 will squeeze out many buyers. I'm not looking for a second half recovery, and think annual sales of 15.3 million cars and trucks would be a good target.

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